Posted by: Pdfprep
Post Date: January 21, 2021
You are considering investing in a following bond:
Your income tax rate is 34 percent and your capital gains tax is effectively 10 percent. Capital gains taxes are paid at the time of maturity on the difference between the purchase price and par value.
What is your post-tax approximate yield to maturity on this bond?
A . 10.09%
B . 10.83%
C . 11.92%
D . 11.06%
Answer: D
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